Gold logs third session climb, holds above $1,260

WilliamL. Watts

SAN FRANCISCO (MarketWatch) — Gold futures settled higher for a third session in a row Wednesday, modestly extending a rise above $1,260 an ounce as optimism over global growth prospects took a hit and equities gave back some gains from their record run.

Gold for August delivery
US:GCQ4
rose $1.10, or 0.1%, to settle at $1,261.20 an ounce on the Comex division of the New York Mercantile Exchange. Prices, which marked a fresh two-week closing high, gained roughly 0.6% over the past two trading sessions.

Gold showed some good price strength early Wednesday and “even evoked hopes of a possible short-covering rally, but much like earlier this year we saw a momentum fade,” said Ross Norman, chief executive officer at Sharps Pixley. “The physical gold market in Europe remains pretty lackluster—but then show me a market other than platinum group metals where there is any significant activity.”

“Traders attention seems to be shifting from the latest batch of U.S. data — to the soccer World Cup in the absence of major drivers,” Norman said.

World Bank cuts forecast

The World Bank late Tuesday cut its global growth forecast to 2.8% for the year from its January projection of 3.2%, citing the harsh winter in the U.S. and the conflict in Ukraine.

“This news is a bit bullish for the gold market as it hints the world’s major central banks can keep their easy-money policies in place at least a while longer,” said Jim Wyckoff, senior analyst at Kitco, in a note.

Equities markets in Europe, Asia and the U.S. moved mostly lower following the cut to the global growth forecast, boosting gold’s safe-haven appeal.

“Gold futures have been acting as a decent hedge to the stock market all year and weakness in equities…is attracting some bids into the gold market,” said Tyler Richey, an analyst for the 7:00’s Report, which offers daily markets commentary.

“For the near term, it appears gold is settling into a new trading range between $1,240 and $1,270-$1,280 level,” he said. “However, it is worth noting that the Commitments of Traders report released by the CFTC last week showed a substantial increase in short interest in recent weeks, so the risk of a short squeeze back to the $1,300 area exists.”

Kitco’s Wykoff said gold bears still have the upper hand on the trading charts, although bulls are gaining some upside momentum. Bulls need to produce a close above tough technical resistance at $1,268.50 an ounce to hit the next upside breakout objective, while a close below last week’s low at $1,240.20 would be a win for the bears, he said in a note.

Palladium continued to climb as a nearly five-month long miners’ strike in South Africa remains unresolved. September palladium
US:PAU4
rose $5.60 an ounce, or 0.7%, to $860.15 after settling Tuesday at its highest level in more than three years.

Platinum failed to get a fresh boost after Tuesday’s 1.9% climb. July platinum
US:PLN4
shed $1.10, or 0.1%, to $1,481.10 an ounce.

July copper
US:HGN4
ended at $3.04 a pound, down a cent, or 0.4%, on Comex.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.